Unemployment Rates Fall for America's Least Educated Workers

By Unemployment-Extension.org | November 2, 2014 at 2:02 PM |

“A better labor market is benefiting more Americans, including those with less education,” Paul Davidson recently extoled in USA Today. “September's unemployment rate fell from 6.1% to 5.9%, slipping under 6% for the first time since 2008. Those with only, or less than, a high school diploma saw even sharper declines. Unemployment sunk from 6.2% to 5.3% for high school graduates and from 9.1% to 8.4% for those without a high school diploma.”

This trend is, in part, because much of the economic growth that has occurred post-Great Recession has occurred in low-wage sectors, including the retail and food service industry. “A large pool of unemployed workers let businesses fill many of them with college graduates in recent years,” explains Mark Zandi, a chief economist at Moody's Analytics.

However with average monthly job growth on the rise and the overall employment rate dropping, these businesses can’t afford to be as picky about educational credentials. Zandi explains that now that there is less available labor, employers are willing to accept those with less education.

Still, however, is this good news? Has the economic situation of America’s least educated workers really improved dramatically? Well, not entirely. Median annual wages last year were a mere $20,350 for individuals who didn't finish high school, and $35,580 for high school graduates, compared to $68,190 for college graduates. In other words college graduates are still doing far better than peers without college degrees financially speaking. Furthermore, many individuals lacking even a basic high school diploma are actively employed but are earning far less than a living wage.

This last point is crucial, as wages and salaries are key to living standards, social mobility, and equality in America’s contemporary economic landscape. Statistics might tell us that there is an adequate quantity of jobs for America’s least educated workers. But it would appear that the labor situation is marked by total inadequacy when it comes to quality.

This bleak situate is likely only to get worse over the coming years. As demand for college-educated workers continues to tail off, those with college degrees will be pushed down the occupation scale, forced into work that traditionally doesn’t require a degree and subsequently displacing workers with lower education levels into even lower paying jobs.

The bottom line is that just because America’s least educated workers are benefiting from a lower unemployment rate doesn’t mean they are in a good situation economically. For example, according to MIT’s Living Wage Calculator, a living wage for an adult supporting one child in Los Angeles, California would be $48,945 annually — a far cry from the $20,350 a worker without a diploma makes on average.

Better workers rights, stronger unions, and living wages are needed. And the economic inequality that this kind of low-wage job growth breeds certainly isn’t good for the country’s economic health. “Higher levels of income inequality increase political pressures, discouraging trade, investment and hiring" explains a recent Standard & Poor's report from a study on wage equality. Income inequality "dampens social mobility and produces a less educated workforce that can't compete in a changing global economy," the report explains.